Bank of Italy Warns 65 Per Cent of Families Have Insufficient Income

Biggest difficulties faced by households headed by unskilled workers or the unemployed

As many as 65% of Italian households reckon that their income does not cover their needs. The warning comes in two separate studies from the Bank of Italy, which also point out that the proportion of households with insufficient income to meet consumption is on the rise. Two issues of the bank’s Quaderni di Economia e Finanza paint a stark portrait of the situation faced by Italian households in the wake of the credit crunch. The studies highlight “clear signals of the difficulties faced by households in saving their desired quantity of resources”. The proportion of income households think they can actually save fell to historically low levels of around 30% in the mid 2000s, as against 50% in the early 1990s. The biggest increase in families reporting insufficient income was among those living in rented accommodation with an unskilled, unemployed, retired or part-time worker as the head of household.

YOUNG PEOPLE WORST HIT – The Bank of Italy studies reveal that some families have felt the impact of the crisis more than others. Low-income earners, young people and those in rented accommodation are worse off by almost all the indicators. The tendency to save fell further after 2008 and the proportion of households with insufficient income to cover consumption rose, a trend that affects low-income families in particular. Half of the households in this category report that income is insufficient to pay for consumption.

CONCENTRATION OF WEALTH – Bank of Italy economists point out that the growing imbalance also emerges in the concentration of wealth. From 2008 to 2010, the proportion of net wealth owned by the three lowest income quartiles fell, to the advantage of the top category, and the tiny fraction of wealth held by young households has dropped even further. If we look at a poverty index that considers wealth as well as income, the indicators can be seen to have deteriorated between 2008 and 2010, particularly among young people and those in rented accommodation. In 2010, some 8.8% of households were both income- and wealth-poor, slightly up on the figure for 2008. However the incidence of poverty among young people leapt by almost three percentage points to 15.2%. For those renting, the proportion is even higher at 26.1%, a spike of 3.5% over the period surveyed.